* Brazil govt improves 2020 GDP forecasts, promises reforms * Peru names Francisco Sagasti as interim president * MSCI Latam stocks index at over 8-mth high (Adds details, updates prices) By Shriya Ramakrishnan and Ambar Warrick Nov 17 (Reuters) - Brazil's real gained on Tuesday amid improving prospects for Latin America's largest economy, while the Peruvian sol bounced back from record lows after the country named a new interim president. The MSCI's index of regional stocks rose more than 2% to an eight-month high, with Mexican stocks surging nearly 4% in catch-up trade. The prospect of accommodative monetary policy - resulting from ultra-low lending rates - has helped emerging market equities recover from pandemic-driven lows. The real jumped 1.7% to the dollar after the economy ministry raised its 2020 economic growth forecast to a contraction of 4.5% from an earlier estimate of 4.7%, citing upward revisions to third quarter activity. The government also said it will accelerate much-touted reforms to public finances and privatization to restore economic credibility in the country. The real has lost around 30% of its value against the dollar this year, making it one of the worst-performing currencies in the emerging market space, due to record-low interest rates and growing concern over Brazil's fiscal health. "Rebounding capital flows to Latam would be a particular boon to Brazil asset markets," Ilya Gofshteyn, senior EM Macro strategist at Standard Chartered wrote in a note. "There is evidence that this process is already under way, and the clearing of political hurdles in November (municipal elections) and February 2021 (congressional leadership contests) would open the door to further recovery." Peru's sol jumped 1.7%, and was set for its best day in more than seven months after centrist legislator Francisco Sagasti was elected by Congress as the country's interim president. Sagasti will be Peru's third president in a week, after the departures of Manuel Merino and Martin Vizcarra, and now faces the challenge of bringing stability to a nation already hard hit by COVID-19 and heading for its worst economic contraction in a century. "It's hard to say how stable the Peruvian political situation will be as recent stress has been largely driven by street protests, which are notoriously hard to predict," said Gustavo Rangel, chief economist, LATAM, at ING. "Initial signs appear positive, for a calmer transition, but I'd say it is still too soon to bet on a smooth transition." Other Latin American currencies marked small moves as a continued spike in global coronavirus cases and doubts over a vaccine dented sentiment. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1202.20 -0.07 MSCI LatAm 2184.01 2.4 Brazil Bovespa 107090.37 0.62 Mexico IPC 41996.55 2.95 Chile IPSA 4054.93 0.19 Argentina MerVal 51991.68 1.775 Colombia COLCAP 1226.27 1.36 Currencies Latest Daily % change Brazil real 5.3481 1.69 Mexico peso 20.3227 -0.38 Chile peso 763.2 0.30 Colombia peso 3642.5 -0.19 Peru sol 3.6017 1.69 Argentina peso 80.0300 -0.07 (interbank) (Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Susan Fenton and Tom Brown)
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